Had I been using this account for business, I would be in serious trouble.
A few months ago, I did some user testing work for a couple of online firms. One of these used sent me money via PayPal, using my e-mail address. This address wasn?t the address I normally used for PayPal but, as there was no way to convince the firm to cancel and reissue the payment, I accepted the money, triggering the new account to be created [1]. I received some further payments on this account, and transferred the money to my ordinary PayPal account.
On November 8th, I received a new payment. I discovered I could not transfer the money as the account had been ?limited?. I messaged support, and they referred me to the appeal procedure to get the account re-activated. I complied with this procedure, sending over a scanned copy of my passport and other documents. This happened at 12:18 PM.
The initial messages about the account limitation
The account was cancelled very quickly
After sending the documents, I didn?t have to wait long. At 1:34 PM, I received the following e-mail, stating that the appeal had been rejected and that the account would be closed. This didn?t prevent me from logging onto the account (to take screenshots), but no transaction was possible.
Appeal refused
Note the short period of time: 12:18 PM to 1:34 PM. The only thing PayPal asked me was to send my documents. This is an odd thing to ask, in hindsight: how could the verification of my identity trigger a rejection of the appeal?
Was there anything suspicious about the account?
?There must be a mistake somewhere?, I kept repeating myself. But I also tried to understand if, effectively, I had done something wrong. I started inspecting my account. This is the full set of transactions:
These are all the transactions in my account
Note that this is the full history: the account was relatively young, and it had been created in August to receive that $35 payment. As you can see, there is a simple usage pattern: I received some money, I transferred them to my other account. Not much room for fraud.
Engaging with PayPal support
I called PayPal support at the phone on Friday 10th, in the late afternoon. I explained the situation and a friendly sounding operator followed the usual ID verification steps and then looked into my account. They claimed they could not see the reason for the account closure (which might not be true, but it seems to be a standard reply), and at one point said ?let me have a look at your transactions?.
I won?t put words in their mouth, but the general gist of the 10-minute call was that the account closure looked strange to them. Without much prompting, they offered to escalate the issue and that they would be in touch soon. I told them I would be leaving for a holiday in Vietnam soon, so to contact me via e-mail preferably.
After not hearing for a few days, I decided to take the Twitter route. On the 15th of November, the day I was flying out, after some public messaging I was invited to bring the conversation to DMs and so I did ? the full conversation is basically just a repeat of my case, followed by a polite reply. No ticket number was ever given to me.
?I know that you are in a sticky situation?
After about a week, on the 21st, they got in touch with me again via DM. It was yet another repeat of the situation of the earlier week:
- ?We?re sorry?
- ?We?ll escalate?
- You can appeal
- Appeal gets rejected
For the record, these are the screenshots:
?In breach of what??, I asked
PayPal claims they will give the money back ? pending verification ? in 180 days. I?m not too worried, it was just 8. But the general gist is worrying because it amounts to ?we won?t be explaining why we?re closing your account?. This is what troubles me: an account with 5 transactions gets closed because of fraud checks, funds blocked, and no explanations are given.
The account is locked
What triggered the deletion?
No explanation was given by PayPal as to what caused them to close the account. Apparently, I?ve been told that when fraud is detected, PayPal won?t explain what it is, for security reasons (it?s the same with banks shutting down accounts). There are, I think, three possible explanations:
- I had 2 accounts ? there is a lot of confusion about this. Effectively, the T&C say you can?t hold multiple accounts, but this FAQ says you can. I asked PayPal support and they said I can (when I spoke with them at the phone, they said having 2 accounts wasn?t the reason for the account to be closed). If this was genuinely the reason, it?s not a fraud-driven closure, so they could have explained; also, the account would have been closed immediately for a breach like this, rather than limited. So I tend to think this was not the cause of the closure.
- Sending money to myself ? there is nothing explicit against this in the T&C, but maybe it was captured by some algorithm.
- Operations from a device/IP address that was reported as fraud ? apparently PayPal closes an account if access comes from devices/IP addresses that have been reported or linked to fraud. Given I probably used the WiFi at work to access the account, which only offers a limited number of public IP addresses, it suggests their security is stupidly strict as there might be thousands of people using that same IP address.
What does this teach me?
Regardless of the reason, what really troubles me here is that no explanation was ever offered. I asked what the account was breaching, and I never received a reply. How can you ?appeal? a decision if you don?t even know the nature of that decision? In many ways, this sounds very similar to this story by Richard Davey about HSBC suspending his bank account (luckily with less serious consequences in my case).
This could have been my business account. Knowing that PayPal can close an account and freeze the funds for 180 days is incredibly worrying to someone intending to do business using PayPal. I certainly won?t be, after this experience. But I believe that we need to have a wider discussion about consumers rights, as my adventure shows what incredibly unbalanced relationship there is between PayPal, which is a financial institution in all but name, and its users.
Notes
[1] There is a way to add extra addresses to existing PayPal accounts; sadly, it?s not widely known that there is.
UPDATE 29/04/2018
PayPal has now allowed me to withdraw the funds ? except the funds have not been transferred yet. This is likely because there was no bank account set, so apparently they?ll need to do further security checks. 172 days have elapsed so far.
FINAL UPDATE
In the end, PayPal managed to get me the 8 back. There is still no explanation as to why my account was closed.
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